Affordable Care Act

What you need to know before Oct. 1

JEANNIE NAUJECK | Special to The Memphis News

Much like Amazon.com, it will offer a place where consumers can compare products from different sellers and buy the one that best suits their needs.

Former Tennessee Gov. Phil Bredesen says the Affordable Care Act “didn’t do much about the cost side of the equation and fell short of recognizing that, even when it’s implemented, there will remain large numbers of uninsured people in this country.”

(AP Photo/Chattanooga Times Free Press, Alex Washburn)

But unlike most shopping sites, this site will offer a product that everyone in America must buy – or pay a federal penalty.

The website is the Tennessee Health Insurance Exchange, an online marketplace in which Tennesseans can shop for and enroll in health insurance. It will offer health plans from major insurers like Cigna, Humana and BlueCross BlueShield of Tennessee.

And, in some cases, consumers will be eligible for discounts in the form of government subsidies designed to make health insurance more affordable.

It’s a major element of the Patient Protection and Affordable Care Act, also known as the ACA or “Obamacare,” a multi-faceted overhaul of the nation’s health care delivery and payment systems that was signed into law more than three years ago and has been criticized by some as ill-conceived at best and disastrous at worst.

One thing the law does provide is full access to health insurance. As of Jan. 1, no American can be turned down for health insurance because he or she has a pre-existing condition, and insurance companies can no longer raise premiums because the member is in bad health.

What it hasn’t done is curb the high cost of medical care.

“I do believe there’s a level of health care that we treat functionally as a right of citizenship in this country,” says former Tennessee Gov. Phil Bredesen, who founded HealthAmerica Corp., which he sold in 1986. “But the Affordable Care Act, while expanding coverage, didn’t do much about the cost side of the equation.

“In terms of controlling the cost, or even the volume, of the kinds of services that the medical community provides, what better time to ask people to do those difficult things than when you’re expanding coverage?

“It was a chance to do something really forward-looking and effective. And that’s why I call it a lost opportunity.”

Not just for those with lower incomes

Still, the ACA is the law of the land, and it will approach full phase-in in 2014. That’s when all Americans will be required to have health insurance or pay a $95 penalty, based on the premise that uninsured Americans who don’t see a doctor and make frequent trips to emergency rooms cost taxpayers more than those with health insurance – even if it means taxpayers have to chip in to help them buy a plan.

To make insurance more affordable, the exchange/online marketplace will target lower-income Americans, small-business employees, the self-employed and others who don’t have insurance through an employer or whose employer-offered insurance is unaffordable.

Those who qualify for subsidies won’t necessarily be poor. People with annual incomes of up to four times the federal poverty level can qualify for subsidies.

That means a single person with up to $45,960 in annual income, or a family of four with $94,200 in income, might qualify. (Qualifications do not include assets such as equity in a home or other investments.)

If a family or individual qualifies for a federal subsidy, the premiums will cost no more than 9.5 percent of their household income. Some may find better deals off the exchange, buying a plan directly from the insurer or through a traditional broker.

Ready for prime time?

A “Before and After” snapshot

(Nashville Ledger/Leigh Singleton)

The exchange online marketplace goes live Oct. 1 for a six-month enrollment period lasting until March 31. Health care coverage is effective as early as Jan. 1.

But while state and federal officials say the exchanges are on track to roll out on schedule, details are still emerging less than one month out, creating confusion among consumers and employers alike.

“There hasn’t been much (education). Nothing has been released to the agents,” says Steck Johnson, an independent insurance agent with HealthCare Solutions Team who is credentialed to sell plans offered on the exchange.

“There are plenty of skeptics out there wondering, ‘Is this thing actually going to work, or are they going to end up pushing it back because they haven’t been able to take care of all the glitches?’

“In terms of the policies, nobody has that. We’re not able to look at how the plans are set up.”

Neither can small businesses, which will be able to offer workers plans through the marketplace under the ‘Shop Exchange.’”

Many are not aware that the law requires them to notify workers about the exchange, says Jim Brown, Tennessee state director for the National Federation of Independent Business, who says many of the 8,200 members are frustrated not only about the new requirements but about the lack of consistent information about them.

“They don’t have HR departments, so we’re going to really double up our efforts to make sure our members know about this requirement. It’s going to ensnare so many small businesses,” Brown says. “We’ll get a lot of the info out to them but there’s still new information coming every day, and we’re only scratching the surface of the 100,000-plus small-business owners in Tennessee.”

No fines yet for businesses

Until last week, Brown was advising members they would be subject to a $100-a-day fine if they did not notify their workers by Oct. 1.

In recent days, however, the U.S. Department of Labor indicated it would not fine businesses, says David Joffe, partner at Bradley Arant Boult Cummings and an expert on the ACA and employee benefits. He’s still recommending employers comply as quickly as possible.

“It’s still a statutory requirement so I think it’s something employers ought to look at doing,” Joffe says.

The Department of Labor has a simple two-page model form containing the required information that employers can copy and mail or hand out to employees.

No more CoverTN

Adding to the frustration, Tennessee is ending CoverTN, a program that helped small businesses provide minimal-coverage health plans for employees, because it does not provide the health care coverage required under the new law. About 16,000 people are enrolled in the program.

“They had bare-bones coverage that they could afford. They liked having something rather than nothing,” Brown explains of CoverTN.

“Those people will be scrambling to look for coverage, and many of them won’t be able to afford what’s in the exchange, even with the subsidies. So they’ll wind up paying the individual mandate penalty.”

That penalty is $95 in 2014 and goes up to $695 by 2016.

CoverTN is a limited-benefit, basic coverage health plan aimed at individuals, the self-employed and small-business owners and employees, many of the same people the exchange will target.

It was designed for people who made too much to qualify for TennCare (the state’s Medicaid program) but could not afford an individual policy on their own. Individual premiums ranged from $37 to $109 per month and were subsidized by the state.

Coverage for basic medical services such as doctor visits, emergency treatment and inpatient and outpatient care was provided by BlueCross BlueShield of Tennessee.

While it was a low-cost plan, CoverTN had its downsides. There was a 12-month waiting period for coverage of pre-existing conditions, and the program reached its budget capacity by December 2009, closing it to new enrollees.

One NFIB member, Link Christiansen, owner of Tennessee Awning Co. in Chattanooga, calls the new law “gigantically troublesome” for himself and his employees and believes many will not be able to afford the plans on the exchange.

“Costs on my employees are going to be horrendous,” Christiansen says.

“I’m concerned that my employees and others in that socioeconomic background are going to be left without any coverage because of the requirements of that program.

“There’s a limit to what people will pay for our product.”

While final details aren’t available and final prices will depend on income, bronze-level plans on the exchange will offer far better benefits than CoverTN at a low cost, according to insurers.

A key provision

One provision of the law does get fairly universal support, even from NFIB members who take issue with every other aspect of the Affordable Care Act, Brown says.

As of Jan. 1, no one can be turned down because he or she has a pre-existing condition, and insurers cannot raise premiums based on health status (with one exception for smokers, who may be charged 50 percent more).

The Affordable Care Act is a multifaceted overhaul of the nation’s health care delivery and payment systems that has been criticized by some as ill-conceived at best and disastrous at worst.

(Shutterstock)

“In the past, if someone was uninsurable, they fell through the cracks,” Johnson says. “They just didn’t have a plan – particularly if they were low income but not so low they could get on TennCare. People that will benefit are families with children where everyone can now get coverage. Or people who are uninsurable because of pre-existing conditions.

“The other side is, who’s going pay for all this? For someone who makes a little too much money, they’re not going to qualify for any subsidies, and in some cases the plans will be significantly more expensive.”

The Congressional Budget Office estimates individuals eligible for health insurance subsidies through the exchange will receive an average of $5,510 in assistance in 2014, a number that goes up to $8,290 by 2023.

What’s in the marketplace

All health insurance plans offered in the exchange/marketplace must offer a set of 10 essential health benefits that include emergency care and preventive services.

And Tennessee individuals and small-business employees will get to choose from plans offering different combinations of cost-sharing, classified as “bronze,” “silver,” “gold” and “platinum” plans.

But the exchange won’t include plans from many insurers.

UnitedHealth Group, the second largest insurer in Nashville and in Tennessee, has declined to participate altogether.

It is one of many insurers that have decided to focus their business on large employer group plans because they are more profitable.

Others are cherry-picking regions where they will offer plans.

Cigna and Humana, for example, are offering plans in Tennessee’s metropolitan areas only because they already have large provider networks in those areas.

Cigna is offering plans for individuals only in the greater Memphis, Nashville and Chattanooga areas, while Humana is offering plans for individuals in the greater Memphis, Nashville and Knoxville areas.

Across the country, BlueCross and BlueShield licensees are the only plans that have consistently filed to offer numerous plans on the state exchanges.

The Blue plans tend to have a large share of the individual insurance market in the states where they operate, and the exchanges give them one more way to reach a market they are already well positioned to serve.

In some states, including Tennessee, health plans are being offered on the exchange by nonprofit cooperatives that were created with funds from the ACA. Tennessee’s cooperative is called Community Health Alliance, and is led by health care veterans.

The federally funded health insurance cooperative will offer plans for both individuals and small businesses, but only in Knoxville, Nashville, Memphis and counties in the west and west-central regions of the state.

‘Narrow network’ plans

BlueCross BlueShield of Tennessee, the state’s largest insurer, is the only insurer offering plans to individuals and small businesses in every county – 24 plan designs (different levels of co-pays and deductibles) using the insurer’s existing B and S medical provider networks.

In the state’s four metropolitan areas, BCBS is also offering “narrow network” plans.

Narrow network plans offer members fewer providers from which to choose, but are less expensive – a tradeoff employers and health plan members are increasingly willing to make to keep premiums down.

Delta Dental and BEST Life and Health Insurance Co. will offer dental policies for individuals and small businesses statewide, and Guardian Life Insurance Co. of America will offer dental plans for small-business employees, also statewide.

Final policy and pricing information for plans in Tennessee was not available at press time.

The Tennessee Department of Commerce and Insurance is still awaiting final approval from the federal government regarding filings for the Tennessee exchange/marketplace and will not release information until then, TDCI spokeswoman Kate Abernathy says.

A sea of information

Indeed, with the exchanges launching in less than a month, a general lack of public awareness combined with new rules coming out literally on a daily basis leads many to wonder if consumers will be ready.

Forty-two percent of Americans do not know that the Patient Protection and Affordable Care Act (often dubbed “Obamacare”) is the law of the land, despite the fact that it took effect more than three years ago, according to a poll released in April by the Kaiser Family Foundation, a nonpartisan health care policy and research institute.

And on the whole, Americans don’t understand how health insurance works. Only 14 percent of Americans ages 25 to 64 years have an accurate understanding of what “deductible,” “co-pay,” “co-insurance” and “out-of-pocket maximum” mean to them, according to a Carnegie Mellon survey published in the Journal of Health Economics in August.

Those terms are basic to every health plan, and not understanding them can lead to poor choices with critical effects on the health and finances of American households, including delayed care, late diagnoses, high use of expensive emergency rooms and personal bankruptcy.

But the Carnegie Mellon study also found a way forward. It found that consumers prefer simple plans that don’t have deductibles or co-pays.

And when consumers were enrolled in such a plan, they were more likely to use less expensive options for their care, such as going to a walk-in clinic in their neighborhood instead of a hospital.

If health insurers offered plans that eliminated complexity and consumers adopted them on a large scale, the survey’s authors concluded, it could bend the cost curve for the entire health care industry.

That’s why BlueCross BlueShield of Tennessee is offering simple plan designs on the Tennessee state exchange, including several with no deductible, explains Michael Eiselstein, director of individual products for the insurer.

“In our own market research across the state, we wanted to understand who the uninsured are and what was important to them,” he says. “That’s one of the things that resonated – simple. So we developed some of our plans in a way that really caters to their needs.”

The no-deductible plans will also be offered off the exchange for those who don’t qualify for subsidies, he adds.

Help is available

For one-on-one help, the federal government has awarded grants to hire and train additional staff at community health centers around the country that typically serve the uninsured and underinsured population.

Certain agencies have also been awarded money to train exchange “navigators” and certified application counselors who will assist the public in understanding the insurance choices and using the website to enroll.

Navigators must act strictly in a counseling/educational role, and must not have any business ties to insurers, sell any plan or make choices on a consumer’s behalf.

One of the agencies training these assistants is the Tennessee Primary Care Association, a not-for-profit organization, whose members are 25 community health centers across the state that typically serve the uninsured and underinsured population.

Earlier this summer, the health centers received a $3 million grant to hire 70 new outreach workers to help clients enroll.

And in August the TNPCA received a navigator grant that it is currently using to select and training people for the one-year positions.

Kathy Wood-Dobbins, CEO of the TPCA, says she’s impressed with the quality of applicants for the positions, which require the ability to absorb and understand a lot of complicated information in a short time, and the communication skills to convey it to people who may never have had health insurance before.

“They’re very bright, very educated, masters-level people who are very excited about this opportunity,” Wood-Dobbins adds.

“Our understanding is that all systems are ‘go’ for Oct. 1. We expect to be ready to go, and to make sure people are informed about the marketplace and can get help accessing it.”

BCBS keeps it simple

Nationally, “Blues” plans are spearheading public education campaigns in every state in which they operate as part of their marketing campaigns.

Here in Tennessee, BlueCross BlueShield has a consumer-oriented website (www.bcbst.com/changes-in-health-care/what-to-expect/) that explains in simple language what people need to know about health insurance and the new law.

That information has been challenging to adapt to, even for insurance companies, says Clay Phillips, director of provider relations and communications for BlueCross BlueShield of Tennessee.

But after three years, the insurer, which is likely to pick a significant share of enrollees on the exchange in Tennessee, is ready to integrate new customers into its provider networks, he said.

“We’ve done our preparation and we’re now sitting and waiting for the game to start,” Phillips said.

“We’re highly confident that we’re prepared for what’s coming.”

Jeannie Naujeck is a Nashville-based freelance writer. This article appeared originally in The Memphis News’ sister publication, The Nashville Ledger.